Bitcoin (BTC) surged to $63,790 at press time, marking its highest price in September and defying the traditional bearish sentiment associated with this month. The cryptocurrency’s impressive rally has been fueled by positive macroeconomic factors, allowing it to buck the trend typically seen during this period. With “Uptober” fast approaching, bullish momentum appears to be gaining traction.
However, market dynamics suggest that Bitcoin’s short-term future may hinge on a key group of traders: those who have held the asset for less than 155 days. Their actions could determine whether Bitcoin continues its upward trend or faces a potential sell-off.
Short-Term Holder Gains Surge
Data from CryptoQuant reveals that after Bitcoin surpassed $60,000 earlier this week, short-term holders—previously operating at a loss—turned a profit. This shift in profitability is reflected in the sharp rise of the Short-Term Output Profit Ratio (SOPR), which hit its highest level since late August. The SOPR’s increase signals a change in market sentiment, moving from negative to positive.
This renewed optimism is further confirmed by the Bitcoin Fear and Greed Index, which climbed to 54, its highest reading in over three weeks. The index suggests that traders are leaning more towards greed, a key factor in driving prices higher.
Additionally, short-term holder profitability is visible in the Realized Price of Unspent Transaction Output (UTXO) Age Bands. Bitcoin traders who have held the cryptocurrency for one to three months had been below their average buy price since August. However, as of September 18th, these traders re-entered profitability when Bitcoin rallied above $61,800. According to CryptoQuant analyst Avocado_onchain, this average buy price now serves as a strong resistance level, and Bitcoin’s recent surge past it indicates a bullish trend.
Profit-Taking Risks Loom
While short-term Bitcoin holders are currently enjoying gains, their newfound profitability poses a potential risk to the ongoing rally. As these traders realize profits, the chances of selling pressure increase. Exchange Inflow data—specifically Spent Output Value Bands—shows that the distribution of coins by these short-term holders has reached a weekly high, coinciding with the rise in Bitcoin’s price.
Despite this, the rally has remained largely undeterred, suggesting that while some profit-taking is occurring, it has yet to significantly impact Bitcoin’s upward trajectory. In fact, the selling by short-term holders could attract fresh buyers into the market, further fueling the rally.
Still, traders should keep a close eye on the $64,000 to $70,000 range. Data from IntoTheBlock indicates that 4.5 million Bitcoin addresses purchased at these price levels, meaning that a significant portion of investors remains underwater. As Bitcoin approaches this resistance zone, it could face a battle to break through.
Whale Activity Remains Low
Interestingly, Bitcoin whales—large holders who can significantly influence market movements—have been relatively quiet during this recent surge. Large holder netflows have remained flat over the past two days, following a brief period of accumulation. This suggests that while smaller traders are driving the current rally, the risk of a massive sell-off by whales remains low.
In conclusion, Bitcoin’s strong performance in September has defied expectations, with short-term holders playing a crucial role in the rally. However, as profit-taking risks emerge and key resistance levels come into play, the next few days will be critical in determining whether Bitcoin can maintain its upward momentum or face a potential pullback.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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